Most states require drivers to have auto insurance coverage. Not everyone can afford to pay for it, though, and this means that there are quite a few uninsured drivers out there. California has a Low Cost Automobile Insurance Program. Other states could decide to adopt this program, eventually.
California is one of the states that requires drivers to buy auto insurance coverage. Unfortunately, not every driver is going to be able to afford to purchase it, and the result is that there are a lot of uninsured drivers in California. The state imposes fines on drivers who cannot show proof of insurance, but the problem is that drivers who can’t afford insurance probably can’t pay the fine, either.
To deal with this problem, California created the Low Cost Automobile Insurance Program. It is a program that is managed by the state of California, but it doesn’t use any taxpayer money.
In order to qualify, a person must be a citizen of California who is at least 19 years of age. The person must meet the low-income eligibility requirements, and own a vehicle that is valued at $20,000 or less. The person also has to have a good driving record, and must have been continuously licensed to drive for at least three years.
Auto insurance policies found through the Low Cost Automobile Insurance Program can cost less than $400 a year. It will provide affordable liability only auto insurance that meets California’s financial responsibility laws. Policies can cover up to two people. The policies don’t provide coverage for Comprehensive and Collision coverage. Those can be purchased separately.
The program functions by having insurance companies volunteer to join in and sell the reduced cost coverage directly to consumers through the program. The advantage for the insurers is that they get some new customers. The hope is that when the person gets through their financial difficulties, they will choose to buy a new auto insurance policy with the insurer who helped them out when they were broke.
It is estimated that 66,000 drivers have used the Low Cost Automobile Insurance Program. It was originally launched in two test cities: San Francisco and Los Angeles. In 2007, it was expanded statewide.
The biggest problem with the program is that it hasn’t been well advertised and many low-income Californians are unaware that it exists. I, for one, had no idea that this program existed until I read about it today, and I have been living in California since 2005.
Image by Mathew Bajoras on Flickr